SENCAR mice are markedly more susceptible to skin carcinogenesis by initiation and promotion than are other mouse strains. The observation that SENCAR susceptibility is a property of the skin itself suggests the utility of in vitro studies to elucidate the mechanism. Experiments with adult SENCAR and BALB/c (a resistant mouse strain) epidermis have selected cell foci resistant to Ca-2+-induced terminal differentiation following treatment with initiating doses of the carcinogens, dimethylbenz[a]anthracene (DMBA) and N-methyl-N'-nitro-N-nitrosoguanidine (MNNG). Such cells have several properties expected of initiated cells. The number of foci was higher at higher doses for each carcinogen. DMBA was a far better inducer of foci than was MNNG in both strains, in agreement with in vivo papilloma incidence data. There was no consistent difference between mouse strains in incidence of induced foci. However, spontaneous foci were routinely found in control dishes of untreated SENCAR cells but not BALB/c. Cell lines established from differentiation-resistant foci have been characterized, and no consistent difference has been found between strains. All lines have epithelial morphology, have a keratin cytoskeleton, and synthesize the keratins expressed by normal keratinocytes in culture. Several lines, however, synthesize keratins not expressed by normal cells. All lines tested were negative for gamma glutamyl transpeptidase, growth in soft agar, and, generally, for tumorigenicity, though a few tumors have developed which seem not to be derived from the cells tested. There are diploid and tetraploid lines as well as mixtures. Transglutaminase was not induced by the tumor promoter, 12-O-tetradecanoylphorbol-13-acetate (TPA), but was induced by retinoic acid. Using the dot-blot technique, surveys of RNA from SENCAR epidermis, both control and TPA-treated, as well as papillomas and carcinomas, have been made for altered expression of a number of oncogenes and only minimal changes in transcript levels have been found.